Sorry, you have not enabled Javascript for your internet browser, so some of our website's pages may not render as fully as intended.Please Click here for easy instructions on how to enable Javascript on your browser or consult your IT support staff for help.

Keep up to date with a free subscription, courtesy of HSBC

Politics in the park

VIPKID and Disney English, two leading providers of English language education, are in direct competition. Both target students aged 2-18, both have a global presence and both advocate a creative learning environment.

On March 18 Walt Disney China issued a statement making the rivalry clear. “The Walt Disney Company has never had any level of business with VIPKID, especially in China,” it insisted on its official WeChat account.

This surprised the management at VIPKID because, as far as it was concerned, the two had been working on some fairly concrete projects at the US giant’s theme parks.

Investment research and tech media outlet EqualOcean postulates an “internal” row between Disney English and its US parent may have provoked the abrasive announcement. It adds that while there was commercial cooperation between the two firms in the past, Disney China is changing direction, and the chances of the two firms working together in future are “dead”.

The speculation is that Disney bosses are focused on defending their intellectual property rights and branded content, which they don’t want to see diluted through cooperation with VIPKID.

VIPKID, founded in 2013 by former teacher Cindy Mi, is a powerhouse of online English language education, valued at $3 billion and backed by Tencent and Sequoia China. Offering one-to-one lessons online with native North American English speakers for Chinese children, its mission is to “encourage curiosity, critical thinking and creativity” (for more see WiC378).

Disney English is operated by the Walt Disney Company and uses teaching methods that draw heavily on Disney’s characters. Lessons are classroom-based and focus on communication through role-play, singing and interactive games.

VIPKID has hundreds of thousands of Chinese children lining up to learn English, and Disney English has unique branding and content that appeals to kids.

On the surface, collaboration between the two seemed logical and potentially lucrative. In April last year, VIPKID launched its ‘World Classroom’ project, cooperating with both the Orange County Tourism Association of California and Orlando’s Tourism Bureau of Florida. Just months later, VIPKID was filming 16 episodes of its ‘teaching content’ at the Florida-based Disney World Resort.

VIPKID had been advocating the benefits of working with Disney and earlier this year the initiative looked to have the continued backing of tourism associations from both the US and China. On the first weekend after the Chinese New Year, over 20 Chinese teenagers travelled to the US to share Spring Festival traditions with their VIPKID English teachers at Disneyland in California as part of the Disney Youth Education (alternatively known as YES) programme too.

So how did a capitalised YES morph into such a blatant “no” from Disney English within the space of a month? For Disney English, its core advantage lies in its content. Clearly someone concluded that deeper cooperation with VIPKID would blunt some of that competitive edge.

If the 16 episodes of the US-based tutorial series were shot with the permission of Disney officials, VIPKID would have been able to upload the material onto its online platforms, including footage of Disney characters from the theme park.

But what may have seemed like sensible marketing to park executives and tourism officials was viewed less favourably by Disney English, which has been looking to boost its English-language teaching business in China.

VIPKID released a response to Disney’s WeChat statement – the one that denied cooperation between the two firms – within a couple of hours of Disney’s own posting. This detailed the background to the filming at Disney World and specified that Disney executives gave speeches at a VIPKID event in September. It also mentioned the YES programme.

However, the statement did not say whether Disney had specifically authorised VIPKID to use the studio’s brand or intellectual property in its language teaching.

The timing of the row isn’t ideal for VIPKID. The Wall Street Journal reported on March 21 that the unicorn is initiating a fresh $500 million fundraising round at a price that would double its valuation to $6 billion.

The Week in China website and the weekly magazine publications are owned
and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is
involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these
publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will
therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.